Friday, January 7, 2011

So, Obama has once again tapped some hard-core neo-liberal corporatist types for his closest advisers. Midwest chairman of JPMorgan Chase and brother of Chicago Mayor Richard Daley, William Daley, is to become the new Chief of Staff. Gene Sperling is to step into the abominable Larry Summers' position as head of the National Economic Council. (I should also note, even if I think Volcker remains a financial predator, Paul Volcker Gives Up, Resigning as Obama Advisor.)

It’s also very likely that the Rubinites and Wall Streeters in the administration are the ones pushing for deficit reduction coming out of the worst downtown since the Great Depression and also are the ones who are likely emphasizing a “structural” nature of unemployment, particularly generated by believed uncertainty of budget deficits – Rubin himself has pushed in these direction recently. These two claims are disastrous for the Democrats, and the worry from many on the outside, myself included, is that these are the voices most strongly heard on economic policy. A larger problem than whether or not Rubin himself is associated with any Democratic insider is that the mentality of the new financial elite could take over policy and ideological thinking within the party that is supposed to represent the interests of working people.

The good news—and the bad news—for America is that the nation’s own super-elite is rapidly adjusting to this more global perspective. The U.S.-based CEO of one of the world’s largest hedge funds told me that his firm’s investment committee often discusses the question of who wins and who loses in today’s economy. In a recent internal debate, he said, one of his senior colleagues had argued that the hollowing-out of the American middle class didn’t really matter. “His point was that if the transformation of the world economy lifts four people in China and India out of poverty and into the middle class, and meanwhile means one American drops out of the middle class, that’s not such a bad trade,” the CEO recalled.

I heard a similar sentiment from the Taiwanese-born, 30-something CFO of a U.S. Internet company. A gentle, unpretentious man who went from public school to Harvard, he’s nonetheless not terribly sympathetic to the complaints of the American middle class. “We demand a higher paycheck than the rest of the world,” he told me. “So if you’re going to demand 10 times the paycheck, you need to deliver 10 times the value. It sounds harsh, but maybe people in the middle class need to decide to take a pay cut.”…

When I asked one of Wall Street’s most successful investment-bank CEOs if he felt guilty for his firm’s role in creating the financial crisis, he told me with evident sincerity that he did not. The real culprit, he explained, was his feckless cousin, who owned three cars and a home he could not afford. One of America’s top hedge-fund managers made a near-identical case to me—though this time the offenders were his in-laws and their subprime mortgage. And a private-equity baron who divides his time between New York and Palm Beach pinned blame for the collapse on a favorite golf caddy in Arizona, who had bought three condos as investment properties at the height of the bubble.

Somewhere in the recesses of my memory, I hear the staccato boom of The Who screaming Won't Get Fooled Again, and I have a deep, deep desire to drink the entire bottle of Irish Cream Liquor I am trying desperately to numb myself with.